It is not quite correct to say that a chameleon can change its colour to match coloured surroundings. A chameleon merely lightens or darkens its body colour in response to changes in the surrounding temperature and brightness. Its colour darkens in dim, cool surroundings and lightens when conditions are reversed. Chameleons also show lightened body colour if suddenly frightened or excited in which case the body colour may not blend with the environment.
The quick-change ability of the chameleon is due to the pigment containing cells located just under the skin surface. When the pigments in the cells are concentrated at the centre, the skin is light in colour. When the pigments disperse throughout the cells, the skin colour darkens. This ability to change colour possibly helps the chameleon to regulate body temperature as well as to camouflage themselves as a protective measure.